PRIVATE EQUITY’S FAILED BET ON VALUE-BASED CARE

The report argues that the private equity business model, characterized by high debt and a focus on short-term returns, is incompatible with the goals of value-based care (VBC). It details how three VBC companies—CareMax, Cano Health, and Clinical Care Medical Centers (CCMC)—filed for Chapter 11 bankruptcy in 2024 due to unsustainable debt levels. The document highlights that these companies served vulnerable dual-eligible Medicare and Medicaid populations and that their failures accelerated healthcare consolidation, as assets were bought by vertically integrated insurers like Humana. It concludes with policy recommendations to limit debt in leveraged buyouts and increase antitrust enforcement.

• In 2024, three private equity-backed value-based care (VBC) companies—Cano Health, CareMax, and Miami Beach Medical Group (dba Clinical Care Medical Centers [CCMC])—filed for Chapter 11 bankruptcy. These providers primarily served patients who were dual eligible for Medicare and Medicaid, a population the report suggests is "especially vulnerable to private equity extraction" because they receive higher reimbursements under capitated VBC models.
• CareMax's bankruptcy was primarily driven by rapid, debt-funded expansion. The company's interest expense rose from $1.66 million in 2020 to $54.43 million in 2023, a nearly 3200% increase. By the time of its November 2024 filing, CareMax reported $390 million in assets against $693 million in liabilities, including a $422.6 million prepetition term loan.
• InTandem Capital Partners extracted at least $575.7 million from Cano Health through management fees, debt-funded dividends, and a reverse merger payout. This financial extraction, combined with an aggressive growth strategy, contributed to a financial decline that resulted in the closure of multiple clinics and the layoff of at least 400 workers.
• Clinical Care Medical Centers (CCMC) filed for bankruptcy in October 2024 with $481.1 million in total debt and only $0 to $50,000 in assets. Approximately 93.5% of its liabilities ($448 million) were owed to its owners, KKR and Sun Capital. The company's assets were eventually sold to Conviva Senior Care, an affiliate of Humana, for $45 million—less than 10% of the price Sun Capital reportedly paid in 2020.
• The bankruptcies of these VBC providers have accelerated industry consolidation. Assets from CareMax, Cano Health, and CCMC were acquired by vertically integrated insurers (such as Humana) or other private equity-owned platform companies, which the report argues is "counterproductive" if the goal of VBC is to reduce healthcare costs.
• The report identifies a broader trend of private equity-linked healthcare failures, noting that in 2024, 21% of healthcare bankruptcies involved private equity-owned companies. Furthermore, 88% of the largest healthcare bankruptcies (those with liabilities over $500 million) in 2024 were at companies with a history of private equity ownership.
• To mitigate the risks of private equity's "debt-based and extractive strategies," the report recommends several policy interventions: limiting the amount of debt used for leveraged buyouts and expansion, prohibiting dividend recapitalizations, limiting management fees, and requiring joint liability for private equity firms and their investments.

APA

Bugbee, M. (2025). PRIVATE EQUITY’S FAILED BET ON VALUE-BASED CARE. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2025/05/PESP_Report_Healthcare_May2025.pdf

Chicago

Bugbee, Mary. PRIVATE EQUITY’S FAILED BET ON VALUE-BASED CARE. Private Equity Stakeholder Project, 2025. https://pestakeholder.org/wp-content/uploads/2025/05/PESP_Report_Healthcare_May2025.pdf.

Wikipedia

{{cite report |last1=Bugbee |first1=Mary |title=PRIVATE EQUITY’S FAILED BET ON VALUE-BASED CARE |publisher=Private Equity Stakeholder Project |date=May 2025 |url=https://pestakeholder.org/wp-content/uploads/2025/05/PESP_Report_Healthcare_May2025.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bugbee2025private, author = {Bugbee, Mary}, title = {{PRIVATE EQUITY’S FAILED BET ON VALUE-BASED CARE}}, institution = {Private Equity Stakeholder Project}, year = {2025}, month = may, url = {https://pestakeholder.org/wp-content/uploads/2025/05/PESP_Report_Healthcare_May2025.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }